Mortgage Rates Hit 6.76%. Should Buyers Pay Thousands for a Lower Rate?

In 2021, when mortgage rates were near historic lows, just 34% of the 30-year primary home-purchase loans carried points, according to a new analysis from Realtor.com®. 

By 2023, as rates surged, that share had jumped to 60%.

“The data provides strong evidence that rate level is the primary driver of the points-buying decision,” Jiayi Xu, senior economist at Realtor.com, explains.

The finding matters again now.

On Thursday, the average rate on a 30-year fixed mortgage rose for the third consecutive week, hitting 6.76%—its highest level in more than 15 months.

And several forces could keep borrowing costs higher for longer: Wholesale inflation accelerated to 5.4% in August, oil prices surged above $100 a barrel as the conflict with Iran escalated, and the 10-year Treasury yield—closely watched by the mortgage market—climbed toward 5%.

For homebuyers still waiting for meaningful relief, that puts a potentially expensive option back in focus: paying thousands of dollars upfront to buy down their interest rate—but is it worth it?

Why higher rates make points more tempting

“Mortgage points let borrowers prepay interest upfront in exchange for a permanently lower rate and smaller monthly payments over the life of the loan,” Xu says. “This is why points buying rises when rates rise. It is the mechanism working as designed, not a new phenomenon.”

While the exact reduction and costs associated with points vary by lender, 1 point generally costs 1% of the loan amount and lowers the interest rate by 0.25%.

Xu’s analysis shows how powerfully that trade-off came into play as mortgage rates climbed.

In 2021, more than 97% of mortgages carrying points had interest rates below 4%. Just two years later, more than three-quarters had rates of 6% or higher.

And even after rates eased somewhat, that shift largely held. In 2025, 72% of mortgages carrying points still had rates of at least 6%.

But something else happened after 2023: Point use began to fall even as mortgage rates remained elevated. The share of eligible loans carrying points declined from 60% in 2023 to 52% in 2025.

Xu says expectations may help explain why.

“This likely reflects widespread expectations of rate cuts on the horizon,” she says. “Many buyers may have planned to refinance once rates fell, rather than paying for points upfront on a loan they expected to replace anyway.”

That makes today’s changing rate outlook particularly important.

If buyers become less confident that substantially lower mortgage rates are coming soon, the incentive to pay upfront for a lower rate on today’s mortgage becomes stronger.

The question, then, is how much buyers are willing to spend to get it—and how long they have to keep that mortgage before the gamble pays off.

Higher rates also produced much bigger buydowns

The recent data shows just how much that wager grew as rates rose. Not only did loans carry points more often, they also carried more of them.

“The data also shows that intensity increased more than participation,” Xu says.

In 2021, just 22% of point-carrying loans had at least one full point. By 2023, more than half did.

The shift was even more pronounced at the high end: The share carrying 2 points or more jumped from 4% to 20%.

Those deeper buydowns have receded since then, but their footprint remains. In 2025, 43% of point-carrying loans still had at least 1 full point and 17% had 2 or more—roughly four times the 2021 share.

That bigger footprint also meant substantially more money was tied up in points at closing.

Among loans carrying points, the median amount rose from $1,240 in 2021 to $3,040 in 2023. It had declined to $2,607 by 2025, but remained more than twice its 2021 level.

But there’s an important caveat to these findings: The Home Mortgage Disclosure Act records reviewed by Realtor.com show how much was paid in discount points, but not who paid them. The money could have come from the borrower, seller, homebuilder, or another party.

Joel Richardson of First Community Mortgage says sellers in Austin, TX, are frequently offering concessions that can be used to cover closing costs, “including buying the rate permanently lower.”

So a mortgage carrying $2,600 in points doesn’t always mean the buyer personally put up that money at closing. But when the borrower does pay for the buydown, the stakes can be substantial.

Borrowers’ out-of-pocket upfront costs for purchase loans rose nearly 33% between 2021 and 2023, from roughly $4,900 to nearly $6,500, according to research from the Federal Reserve Bank of Philadelphia—and discount points were the major driver of that jump.

The real question is how long you keep the mortgage

It’s the trade-off at the center of whether points are worth it: The more a borrower spends lowering the rate today, the smaller the monthly payment can become—but the more money has to be earned back before the buydown actually leaves them ahead.

“Whether discount points are worth it depends on the break-even period,” says Ben Mizes, president of Clever Real Estate and a Missouri real estate agent.

Consider a buyer choosing between a $300,000, 30-year mortgage at 6.5% and paying 2 points—$6,000 upfront—to lower the rate to 6%.

The lower rate reduces the monthly principal-and-interest payment from roughly $1,896 to $1,799, a savings of about $98 a month.

But it takes roughly 61 months—or just over five years—for those monthly savings to recover the initial $6,000 expense. Only after that does the borrower begin coming out ahead.

At first glance, five years may not sound like a particularly difficult threshold to clear. Homeowners today stay in their homes for a median of 8.5 years, a 25-year high.

But points are attached to the mortgage, not the house. So the better question to ask is: How long do you plan to keep that particular loan?

Refinancing before the break-even point effectively cuts short the opportunity to recoup the upfront cost. Once the original mortgage is paid off and replaced with a new one, the borrower no longer receives the monthly savings generated by the points purchased on that loan.

Historically, that can happen much sooner than homeowners move. Between 1994 and the first quarter of 2020, borrowers kept a mortgage for a median of just 3.6 years before refinancing—well short of the five years required to break even in this example.

And that’s exactly why the uncertainty surrounding mortgage rates now cuts both ways.

If mortgage rates stay elevated for years, a borrower who buys points and keeps the loan may have plenty of time to recover the upfront cost.

But if rates fall enough to make refinancing attractive three years from now, the original mortgage could disappear long before those points have paid for themselves.

“If the savings haven’t yet caught up with the points cost,” Xu says, “buying points ends up not being worth it.”

The lowest rate isn’t always the best deal

Even a borrower who expects to keep the mortgage long enough to reach break-even has another calculation to make: What else could that upfront cash be used for?

“First-time and cash-constrained buyers should keep some money to cover closing costs, make repairs, and for emergencies,” Mizes says.

Consider again the buyer who puts $6,000 toward points to save about $98 a month. That money can no longer serve as a cushion for a repair, moving expense, or other surprise after closing. And if an unexpected expense then has to be financed at a higher interest rate, some of the benefit of the lower mortgage payment is erased.

And if it seems farfetched, consider that 41% of first-time homeowners said they spent more than expected on maintenance, improvements, and emergency repairs, according to a recent survey.

In a high-rate market, spending thousands of dollars to make a mortgage payment smaller can be tempting—and for some borrowers, it can pay off.

But a lower rate is only a bargain if the price of getting it makes sense.

What matters is how much you have to spend upfront, what you get in return, and whether you’ll keep the mortgage long enough to come out ahead.